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By | Neil McAllister 13th March 2015 23:59

Judge OKs HP's cash-free settlement plan in Autonomy investor suit

'Governance changes' but no money damages

HP has won court approval of a deal that would settle a lawsuit brought by shareholders over HP's botched acquisition of software maker Autonomy.

US District Judge Charles Breyer has granted preliminary approval of the latest version of HP's proposed settlement, Bloomberg reports, despite having rejected similar proposals twice in the past.

If the deal goes forward, HP will walk out of court without paying any monetary damages.

Judge Breyer tossed out two earlier settlement proposals because they gave HP executives broad immunity against future prosecution, including for matters unrelated to the Autonomy gobble – something he says is no longer true of the latest version.

"The third amended settlement is within the range of possible approval because it appears to be a fundamentally fair, adequate, and reasonable resolution of shareholder claims," the judge said.

Investors brought suit against HP in 2013 over allegations that the company's executives knew that key information in Autonomy's financial reports was misleading, yet proceeded with the ill-fated acquisition anyway.

Former Autonomy executives, including CEO Mike Lynch and CFO Sushovan Hussain, have rejected such claims, arguing that Autonomy's crash and burn – which ultimately saw HP write down more than $8bn of the $10bn it spent on the merger – was entirely due to the incompetence of HP's management team.

Still, they argued, HP should be forced to litigate the shareholder suit, because then it would have to reveal documents that the Autonomy bosses believe will exonerate them of any wrongdoing in the matter.

That doesn't seem likely to happen now, as it looks like HP's latest settlement bargain will see it avoid a trial.

Under the terms of the settlement, HP will be required to create a risk management committee led by key executives, change how its board oversees mergers and acquisitions, and introduce a new due diligence policy for mergers. It won't, however, have to fork over any cash.

The new policies will reportedly apply to both halves of HP once the company splits in two, a process that is expected to complete by the end of the year.

HP said it will still move forward with plans to sue Lynch, Hussain, and other former Autonomy execs. ®

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